GM Posts Big Losses

General Motors recorded its largest quarterly losses to date- $39 billion and nearly $69 a share- ending their 3-quarter profitable streak. This time last year, GM had reported losing 26 cents a share. Their shares fell more than 4%, dropping to $34.66 on the morning NYSE. These monumental losses come on the heels of a recent Detroit gloom; many analysts expect total auto sales to fall even further in 2008. Ford is expected to report a loss of $1 billion tomorrow while Chrysler is expected to cut 11,000 jobs. So these problems are not specific to GM.

Further, GM said that they would undertake the responsibility of removing net deferred tax assets from its books. These could have been used to offset taxes on future profits, with their termination suggesting that GM does not expect to earn significant profits in the near future. This does not augur well for the future of automobiles, but it suggests that Americans are deciding to restrict spending on cars as the crude oil price nears $100 a barrel.